Correlation Between Great Ajax and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Great Ajax and Annaly Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great Ajax and Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Ajax Corp and Annaly Capital Management, you can compare the effects of market volatilities on Great Ajax and Annaly Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Great Ajax with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Ajax and Annaly Capital.
Diversification Opportunities for Great Ajax and Annaly Capital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Annaly is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Great Ajax Corp and Annaly Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Management and Great Ajax is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Great Ajax Corp are associated (or correlated) with Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Management has no effect on the direction of Great Ajax i.e., Great Ajax and Annaly Capital go up and down completely randomly.
Pair Corralation between Great Ajax and Annaly Capital
Considering the 90-day investment horizon Great Ajax Corp is expected to under-perform the Annaly Capital. In addition to that, Great Ajax is 8.88 times more volatile than Annaly Capital Management. It trades about 0.0 of its total potential returns per unit of risk. Annaly Capital Management is currently generating about 0.17 per unit of volatility. If you would invest 2,440 in Annaly Capital Management on August 24, 2024 and sell it today you would earn a total of 153.00 from holding Annaly Capital Management or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Ajax Corp vs. Annaly Capital Management
Performance |
| Timeline |
| Great Ajax Corp |
| Annaly Capital Management |
Great Ajax and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Ajax and Annaly Capital
The main advantage of trading using opposite Great Ajax and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Ajax position performs unexpectedly, Annaly Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Great Ajax vs. Ellington Financial | Great Ajax vs. Dynex Capital | Great Ajax vs. Ares Commercial Real | Great Ajax vs. Cherry Hill Mortgage |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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